Topic 11 Consolidation - Other issues - Australian School of Business Topic 11 Consolidation Other issues Directandindirect Australian School of

Topic 11 Consolidation - Other issues - Australian School...

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Australian School of Business Topic 11 Consolidation: Other issues
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Australian School of Business Consider the following group structure: P T S 70% 60% P controls S and S controls T S and T are both subsidiaries of P P would have to consolidate S and T into the one group NCI S 30% NCI T 40% Direct and indirect  non-controlling interest
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Australian School of Business This structure requires the recognition of: DNCI – direct non-controlling interest INCI – indirect non-controlling interest The interests of all parties in this group are summarised as follows : Direct and indirect  non-controlling interest S T Parent Interest Direct Indirect Total Non-controlling Interest Direct Indirect Total Total ownership interests 70 % - -     42 % (70% x 60%) 70% 42% 30 % 40 % -     18% (30% x 60%) 30% 58% 100% 100%
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Australian School of Business 2 x pre-acquisition elimination entries NO change to format of consolidation journals re: BCVR pre-acquisition elimination elimination of intragroup transactions HOWEVER calculation of NCI share of equity changes from the last chapter Impact of multiple subsidiaries  (and INCI) on consolidation
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Australian School of Business The major consideration in performing a consolidation with indirect non-controlling interests is to distinguish between: Pre acquisition equity of the subsidiary  These amounts are only allocated to the DNCI (STEP 1) AND Post acquisition movements of equity of the subsidiary  
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  • One '11
  • KNAPP
  • Financial Accounting, NCI, Generally Accepted Accounting Principles, NCI Share

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